On Wednesday, the Portuguese government survived a vote of no-confidence in parliament. Although the proponents were defeated, the vote marks a definitive rupture between the two main parties, the PS (Socialist party) who tabled the vote, and the main governing party, the centre-right PSD. "Your government is destroying Portugal. We need to replace this incompetent government with a better one," said the Socialist leader António José Seguro to the prime minister, Passos Coelho, in parliament on Thursday.

The acrimony between the two leaders contrasts vividly with the consensus that existed only two years ago. The economic deterioration of the country and growing social discontent is taking its toll on political stability. In May 2011, when Portugal was bailed out by the EU troika, the two main governing parties signed a pact committing to harsh deficit and public debt targets for the next three years.

In the June 2011 parliamentary elections, 70% voted for one of these two parties. The Portuguese adjustment process thus gained legitimacy at the ballot box.

Since then, however, there have been persistent failures in meeting the economic objectives, despite the fact that the government has implemented an extremely ambitious cuts agenda. The government forecast that GDP would fall by 1.8% in 2012 and 1.5% in 2013. In fact it fell by 3.2% in 2012 and is predicted to fall by 2.3% in 2013. The budget deficit has not fallen as much as expected, reaching 6.4% in 2012 and 5.5% in 2013. Significantly, unemployment has soared to 15.7% in 2012 and is predicted to reach 19% in 2013. In March, the troika agreed to give the government an extra year to meet its targets, which had the effect of compounding the general feeling that the government is ineffective, and that the recipe for Portuguese economic problems is wrong.

Social tensions are growing – a recent report counted more than 3,000 demonstrations in 2012, compared with just 708 in the previous year. There have been key anti-government protests – most recently in the beginning of March – that gathered hundreds of thousands of people across the country.

The Socialists' initial support gave way to their abstention in last year's budget. However, that budget was deemed unconstitutional by the constitutional court. This year, the Socialists voted against the budget, and the country awaits the court's verdict on the 2013 budget in the next few days. If the court once again rejects some of the budget cuts as unconstitutional, this would signify that the government needs to find alternative sources of income to meet the fiscal targets. Depending on the size of the sum involved, Coelho has said that he may resign.

In a letter sent to the troika on Wednesday, Seguro reaffirmed his support for fiscal adjustment and that his party would honour Portugal's international commitments. However, he did suggest that it was necessary to renegotiate the conditions under which the adjustment takes place, through changes to deadlines, deferment of interest payment and renegotiated interest rates, among others. Still, given that the parties on the left of the Socialists are vehemently against the pact, the PS knows that it can only lead a stable government if it agrees to enter a coalition with one of the rightwing governing parties.

Thus, although recent events make future consensus on cuts less likely, the vote of no-confidence in no way posits the end of Socialist support for the adjustment process. What it signals is a decline in the likelihood of success of the programme's implementation for 2013, which includes further cuts to be proposed in the next few months, including an extra €4bn cut in state expenditure.

Portugal's political stability, and its capacity to deliver on its international promises, may end up hanging on the EU's sensitivity to the political and social tension which the derailing of the adjustment process is producing.